COMPANY NOTES
BY CUSTOS A NEW year approaches and every investor will be asking himself what he should buy. I propose to be rash enough to give my personal choice. Conventionally, in making up an investment list one begins with gilt-edged and fixed-interest stocks. It would be very surprising not to see these stocks higher in twelve months' time. The success of the new City of London 51 per cent. issue is already helping the recovery. WAR LOAN never fell below 68 in the worst of the Suez crisis and is still not much above its low' for all time. For a short-medium I like 3 per cent. FUNDING 1966-68 with 20 points of 'appreciation certain in about eleven years. For the surtax payer the best stock is 21 per cent. SAVINGS 1962-67 with over 20 points coming in ten years. For the very elderly 4 per cent. VICTORY at a little over 90, with a life of about ten years (31 per cent. drawings at par per annum). It is credited at 100 for death duties. For fixed interest there are some most attractive debentures on loan stocks on offer—FISONS 6 per cent. at 971 and GEC 6 per cent, loan stock at par and the new 51 per cent. con- vertible debentures of the ICI on January 2. It would be foolish not to take advantage of these cheap offers.
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This is not yet the time to buy industrial shares in general but some have been pretty well deflated by the present crisis. FOI example, in motor shares BRITISH MOTOR CORPORATION. The shares have been below 6s. and are now I s. 3d. higher because the market' turned on the announcement that the hire-purchase deposit on cars has been lowered from 50 per cent. to 20 per cent. Nevertheless the yield is still around 81 per cent. I have been re-reading Sir Leonard Lord's speech at the recent annual meeting and was impressed by the state- ment that his exports to the US and Canada were up 22.7 per cent. and that in the eight months to last August BMC secured 56' per cent. of the total British registrations in the American market. The replacement service—a most important point—has been greatly improved. Further capital spending of £6.8 million is being undertaken and Sir Leonard added that never in the past had they been wrong in pursuing a policy of expansion. The world, he said, was still hungry for motor-cars. Considering the 1956 strike and the credit squeeze apd the cuts in Australian and New Zealand imports, BMC has weathered the storm very well. But if any investor is in doubt he should couple a purchase of BMC with FORD MOTOR around 28s. (yield 51 per cent.) and the new LEYLAND around Is. 6d. premium (yield over 6 per cent.).
After the deflation of the oil shares every investor, should be having a stake in SHELL and BURMAH OIL which offer yields around 34 per cent. and over 4 per cent. respec- tively. No other industry can expect the 10 per cent. per annum expansion which the oil business is planning. This purchase might be coupled with two dollar oil shares -SHELL OIL for investment and for a speculation DEL RIO or its partner CENTRAL LEDUC at 591 and 124 respectively which are producing and drilling in the Canadian Leduc oil field. But if the investor has enough in oil and does not want an industrial risk he might safely buy MARKS AND SPENCER at around 60s., which is I 1 s. or 15 per cent, below its 1956 high. The interim dividend has beeR increased and the total for the year may be 55 per cent., which would give a yield of around 41 per cent.
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